What You Should Know About the IRS Automated Underreporter

Just be sure to follow these steps and do your due diligence in your research and response. Always work with an experienced tax professional, like a tax attorney, when you get a notice in the mail and you’re not sure what to do. You never want to risk taking a misstep or doing something that will lead to more penalties and issues with the IRS. A tax expert will help you get back in good standing with the IRS in no time. Taxpayers have 30 days to accept or reject the information in an AUR notice.

• Each notice or letter contains a lot of valuable information, so it’s very important that you read it carefully.
• Tax deductions on your return will also be evaluated by the IRS in these cases, for example.
• Blanks may be present only at the end of the name control.
• This guide from the IRS will help you gain insights on what to do when you receive a CP2000 notice.
• If you’re not satisfied with the resolutions offered by the manager, you can file a petition with the U.S.
• The AUR unit also allows the agency to sift through tax returns much faster to flag discrepancies so they can be resolved in a timelier manner.

An expert like a tax attorney can help you navigate the AUR process and identify and correct any issues before they become major problems for you. Try not to worry if you receive a CP2000 Notice from the IRS that was generated from the AUR unit. These notices are quite common and are usually fairly easy to resolve.

FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes

This unit is the automated underreporter system. It is part of the IRS underreporting department and aims to detect underreported income in a more efficient way. The unit first receives data from various third-party sources, like employers, which is then matched with the income reported on taxpayers’ tax returns. The AUR unit then automatically generates an underreporter notice, or CP2000 Notice, if a discrepancy is found. This notice informs taxpayers of the mismatched information and outlines any additional taxes, penalties, or interest that may be owed.

• If you received a CP2000 notice from the IRS, do not panic.
• If the EIN and name control do not match at the parent (consolidated) level, the e-filed return will reject.
• This unit has the power to identify discrepancies between taxpayer records and the data reported to the IRS by third-party sources, such as banks, employers, and investment firms.
• In that case, you have to send in the same information you handed in in the first place with a letter of explanation.
• These same tax examiners are also responsible for flagging returns for tax fraud audits.
• In a nutshell, when there is an income information mismatch in the returns filed by you and the information that IRS already has on file, the AUR generates an automatic CP2000 notice.

After 20 minutes on hold, I gave up on that option. Plus, you’ll likely have to send in documentation anyway, says Stevenson. CP2000 is an IRS notice generated by an Automated Under-Reporter (AUR) Control System.

What Is the AUR Unit?

If the IRS fails to receive a Notice CP 2000 response or if the response provided is inadequate, it will then issue Notice 3219A. Also known as a Notice of Deficiency or a 90-Day Letter, Notice 3219A is the IRS’s procedural method of moving the case to the point where it can assess the proposed tax change. As the name implies, the AUR is a partially automated process whereby your tax return is matched against information returns gathered by the IRS. Information returns and schedules available to the IRS are extensive, including much more than just W-2 and 1099 forms. Once the taxpayer is matched to their Social Security number, the tax and information returns are compared to identify mistakes and potential omissions on the tax return. Sometimes a CP2000 notice simply informs a taxpayer when the tax ID they provided does not match the ID found on third-party documents sent to the IRS.

If the EIN and name control do not match at the parent (consolidated) level, the e-filed return will reject. The AUR unit is responsible for identifying discrepancies on a tax return, which can ultimately result in additional tax liabilities, penalties, and interest. Understanding the AUR unit of the IRS is crucial for any taxpayer. One important note is that the automated matching system is only instigated if what you reported on your tax return is lower than what other parties reported to the IRS. You will not be notified by this system if you reported an excess of income.

Q3. Are my subsidiary corporations’ name controls important?

You can also write to us at the address in the notice or letter. If you write, allow at least 30 days for our response. If a taxpayer receives Notice CP 2000, it is crucial for them to respond prior to the notice deadline and explain whether the “call out” has been reported or is otherwise nontaxable.

• If the IRS agrees with your response form, your original tax return will be accepted and the IRS will inform you about the same.
• Check your records to reconcile the discrepancies.
• In some cases, a CP2000 notice may show that changes after an AUR review resulted in a refund or an increase in the refund amount.
• A name control is a sequence of characters derived from a taxpayer’s name that is used by IRS in processing the tax return filed by the taxpayer.
• You may owe additional tax if the AUR unit was correct in finding the discrepancy.

These same tax examiners are also responsible for flagging returns for tax fraud audits. In 2022, the IRS began rolling out voice bots, or automated assistants, on a number of lines to assist taxpayers with common issues or questions. If you’re routed through one of these voice bots when you call the agency, you might be able to get a quick answer to a simple question. If you need more assistance, the agency says you can still speak with a live representative and also check out its self-service options. We provide our contact phone number on the top right-hand corner of the notice or letter. Typically, you only need to contact us if you don’t agree with the information, if we requested additional information, or if you have a balance due.

In some cases, a CP2000 notice may show that changes after an AUR review resulted in a refund or an increase in the refund amount. In other cases, errors detected by the AUR system could mean a taxpayer owes taxes or owes more taxes than they initially paid when they filed the original federal tax return. You’ll need to sign the included response form if you find the IRS is correct and your original tax return information was incorrect. You usually just need to sign and send the form back by the deadline provided on the form. IRS data shows that only about 85% of taxes are paid on time and voluntarily. Filing a successful request for reconsideration will result in the IRS not assessing the proposed tax shown on Notice 3219A or abating any previously assessed tax in the case.

You can call the IRS on the number provided in the CP2000 notice to talk to an examiner. You can resolve any issues at this point without further escalations. Most likely, the IRS staff wants to help you discuss the changes proposed in the notice. If you’re still not aur control number irs satisfied with the resolutions offered by the examiner, you can ask to speak to the manager. If you’re not satisfied with the resolutions offered by the manager, you can file a petition with the U.S. Tax Court after you receive a Statutory Notice of Deficiency.